20 Housing Markets Cooling the Fastest

[Eric Fernwood]

I recently read an article listing 20 markets that are cooling the fastest. I can’t comment on the other markets mentioned, but I know Las Vegas.

Below is the data I believe they referenced from Redfin for Las Vegas. (Redfin notes that their data is from the local MLS.) It shows the Sale-to-List price ratio and Homes with Price Drops.

While the above data is attention-grabbing, it does not provide useful information or a valid representation of the Las Vegas market. Below are charts from the MLS (10/11/2022), including ALL property types and price ranges.

Median Sales Price

Median sales prices continue to rise.

Median Price Per Square Foot

The median price per square foot continues to increase.

Median Days on Market

In a “normal” market, properties stay on the market for 30 to 45 days. Today, the median number of market days is about ten. So, the market has “cooled” from 8 to 10 days. Not much “cooling,” in my opinion.

Months of Supply

In Las Vegas, a balanced market is six months of supply. We are approaching two months of supply. There are still more buyers than sellers. Inventory did rise, but we are also approaching the slowest time of the year. So there is a seasonal component. Plus, rising interest rates turn would-be buyers into renters.

Statistics Can Be Misleading

As an engineer, I can tell you that statistics is a great way to make data say anything you like. A quote from Mark Twain.

Whenever I hear the word “adjusted,” I know someone altered the data to suit their purpose and should usually be disregarded. For example, based on the following data, I can factually state that home prices fell 2.9% ((1900000 - 1845000)/1900000).

While mathematically correct, it is, at best, misleading. Here is how I would describe the market change. Properties priced at $300,000 increased by 5%. Over the same period, a million-dollar property decreased by 10%.

The error is combining sales data for $300,000 and $1,000,000 properties and taking an average. They are not the same buyer demographic. You can have a high demand for $300,000 homes and little demand for million-dollar homes.

You cannot average apples and oranges and get anything useful.

Summary

Rumors of a significant housing decline in Las Vegas are greatly exaggerated.